Chapter 9 Profit Planning 2 Prepare 3 Prepare a materials a production hadpet for each of the months July theough October parchases budpet for geico cosspound, by month and in totall, for the third quarer Also prepare a schedule of expecsed cesh payments for grico comgound, by moth and in sotal, for the thind quarter PROBLEM 9-17 Cash Budget with Supporting Schedules 11.02. 104, LO) Janus Prexducts,In.is a merchandising company that sells binders paper, and other school sup- plies. The company is planning its cash soods for the thied quanter In the past, Jaras Prodacts bas had to borrow mosey doring the thind quaner to sapport peak sales of back-to-school manerials, which occur during Aegust. The following information has been insembled to asuist in preparing a cash badget for the quarter a. Badgeted moetdhly income statements for July-Ocsober are as folloas: $40,000 $70,000 $50,000 $45,000 27,000 Sales Cost of goods sold Gross margin Less operating expenses: 24,000 42.000 0,000 6,000 28,000 20,000 18,000 Selling expense 7.200 11,700 8500 7,300 5,600 700 6.100 12800 18,900 14,800 13.200 5,900 Total expenses $ 3.200 9,100 $5,400 4,800 Includes $2,000 depreciation each moth b. Sales are 205% for cash and 80% on crodit Credit sales are collected over a three-month period witb 10% collected in the month of sie. 70% in the month following sale, and 20% in the second month following sale. May sales- taled $30,000, and June sales totaled 536,000 c. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a months inventory pur- chases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable for inventory purchases at June 30 total $11,700 The company maintains its ending invessory be sold in the following moeth. The merchandise inventory at June 30 is $18,000. levels at 75% of the cost of the merchandise to e. . Land costing $4.500 will be purchased in July g. Dividends of $1,000 will be declared and paid in September h. The cash balance on June 30 is $8,000, the company must maintain a cash balance of at least i. The company can borrow from its bank as needed to bolster the Cash account. Borrowings and this amount at all times. yments must be in multiples of $1,000. All borrowings take place at the beginning of a month, and all repayments are made at the end of a month. The annual interest rate is 12%, Compute interest on whole months (on 2. and so on). Required 1. Prepare a schedule of expected cash collections from sales for each of the months Jul a An inventory parchases budget for cach of the months July, August, and Septemher 3. Prepare a cash budget for the third quarter, by month as well as for the quarter in total. Sbow August, and September and for the quarter in total. 2. Prepare the following for merchandise inventory b. A schedule of expected eash disbursements for inventory for each of the months July August, and September and for the quarter in total. borrowings from the company's bank and repayments to the bank as needed to maintain the minimum cash balance. PROBLEM 9-18 Cash Budget with Supporting Schedules [L02 L04, LO7, LO8 has stated that the loan request must be accompanied by a detailed cash budget that shows the quar- in which repayments can be made. The president of Univax, Inc. has just approached the company's bank seeking short-term financ ing for the coming year, Year 2. Univax is a distributor of commercial vacoum cleaners. The hank ters in which financing will be needed, as well as the amounts that will be needed and the quariers